Importance of Auditing
A financial auditing is a process of examining an organization’s financial records to determine if they are accurate and in accordance with any applicable rules, regulation, and laws. There two types of audits:
External and internal audits.
External auditors come in from outside the organization to examine the accounting and financial records and provide an independent opinion on these records. There is a law requires that all public companies have their financial statements externally audited.
Internal auditors work for the organization as internal employees to examine records and help to improve the internal processes such as operations, internal controls, risk management and governance.
Importance of an Audit Systems to companies
Auditing means evaluating the effectiveness of a company’s business objectives, obtaining reliable financial reporting on its operations, minimizing its cost of capital.
An effective audit system is important for every company because it enables it to pursue and attain various corporate objectives. Some of the advantages are:
• Risk of misstatement
• Fraud prevention
• Cost of Capital
Risk of misstatement
Auditors assess the risk of material misstatement in a company’s financial reports. Without a system of internal controls or an audit system, a company would not be able to create reliable financial reports for internal or external purposes.
Audit serves as an important role for companies in fraud prevention. Recurring analysis of company’s operations and maintaining an accurate system of controls can prevent and detect various forms of fraud and other accounting irregularities.
Cost of Capital
The cost of capital is important for every company, regardless of its size. Cost of capital is largely comprised of the risk associated with an investment. Strong audit systems can reduce various forms of risk in an enterprise, including its information risk.
About US || Orient Audit, Dubai
Orient Auditing is a full service certified accountants firm located in Dubai. We provide audit, accounting and financial statements preparation and business consulting to small and mid –midsized businesses. If you are looking for any accounting services. Get the best service from Orient Audit Dubai.